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Informist, Monday, Jul. 27, 2026

 

By Eshitva Prakash

 

MUMBAI – Aggressive selling of put contracts across the options chain of the Nifty 50 and a large demand for near out-of-the-money call options indicates a significant easing in traders' negative sentiment. They covered short positions across low vega options as the Nifty 50 Monday snapped a five-day fall on hopes that the war in West Asia will end and the Strait of Hormuz will be reopened for transit. However, with a heavy build-up of open interest near spot levels, the 50-stock index is likely headed for a range-bound session Tuesday.

 

The headline index rose after Iran's statement Sunday that it would halt attacks across the region if the US did the same. As per the latest news on the subject, the US continues to hold fire against Iran after nearly two weeks of heavy bombing. Several short positions were liquidated after the unexpected announcement from Iran and the open interest on July options fell sharply as traders closed loss-making positions before the monthly expiry.

 

Positive developments in West Asia forced put holders to cover their short positions and buy deep-in-the-money call options. Traders had purchased fresh put options after the Nifty 50 Friday closed below its 50-day moving average of 23800 points. However, premiums on several deep-out-of-the-money put contracts were liquidated when the 50-stock index moved higher Monday. A decline in crude oil price and a fall in India VIX, the market's fear gauge, supported buying interest. With implied volatility on options with the highest change in open interest hovering around India VIX's Monday close, volatility is unlikely Tuesday despite the expiry of the Nifty 50's monthly options.

 

The value of the September futures contract of Brent Crude, a global benchmark for crude oil prices, fell over 8% to $88.91 per barrel on the Intercontinental Exchange as on 1621 IST. The fall in crude oil price improved market sentiment by lowering expectations of higher inflation in oil importing countries, improving current account outlook and reducing pressure on the rupee, analysts said.

 

Monday, the Nifty 50 closed almost 1% higher at 23995.95 points after testing its intraday resistance of 24000 levels multiple times. India VIX declined nearly 10% to 12.66, showing an increase in risk appetite. Shares of information technology companies such as Infosys, HCL Technologies, and Wipro rose sharply even as the rupee appreciated against the dollar after global brokerage Jefferies upgraded the IT sector to "neutral" from "underperform". The brokerage said IT stocks had already borne the brunt of concern around artificial intelligence and as the AI trade pauses, it sees scope for an upside in the sector, particularly after the large decline in stock prices. Some defensive trades unwound with pharmaceutical stocks underperforming their peers in the headline index. Oil and Natural Gas Corp. was the biggest drag on the index and ended over 4% lower.

 

Traders purchased near out-of-the-money call options across 24050-24200 strike prices, pushing premiums on these contracts sharply higher. However, further out-of-the-money call options continued to be sold, with their implied volatility spiking before monthly expiry. Traders sold put contracts across the options chain of the Nifty 50 with put contracts around 23800-23900 strike prices coming under the most selling pressure.

 

"Put writing was seen at multiple strikes along with some call addition at OTM (out-of-the-money) strikes," Vipin Kumar, assistant vice-president at Globe Capital Market, said. "Maximum positions for the current week expiry are placed at 24000 CE (call) and 24000 PE (put), indicating (that) the coming session (will be range-bound)," he said.

 

The options chain of capital goods major Larsen & Toubro reflects expectations of a sharp swing Tuesday, largely because of the stock's monthly derivative expiry and its earnings on the day. Traders bought in-the-money contracts across both call and put options. Some traders unwound their long positions and others covered their short positions. Hefty implied volatility around the contracts with the highest open interest can liquidate positions on either side quickly. Analysts expect the company's sales growth to be scathed by overseas and domestic conditions in the June quarter. It is expected to report a consolidated net profit of INR 38.50 billion, up 6.4% on year but down 27% sequentially. The company's consolidated revenue from operations for the quarter is expected to be INR 685.64 billion, up 7.7% on year and down 17% on quarter.

 

Short-covering in the options chain of Hindustan Unilever right before the company reports its June quarter earnings indicates a bullish view. Traders also wrote deep-out-of-the-money put contracts. The highest open interest was around the INR 2,200 strike price, which is over 1% higher than Monday's closing price. Call contracts of INR 2,220 strike price were also in demand, albeit at a lower premium. The fast-moving consumer goods major's bottom line is expected to decline nearly 3% on year to INR 27.82 billion in the June quarter. However, its top line is projected to rise around 8% on year to INR 171.77 billion.

 

--Nifty 50 July closed at 24040.00, up 233.50 points; 44.05-point premium to the spot index

--Nifty 50 August closed at 24118.00, up 243.40 points; 122.05-point premium to the spot index

--Nifty 50 September closed at 24250.00, up 238.10 points; 254.05-point premium to the spot index

 

HDFC Bank, Infosys, ICICI Bank, Reliance Industries, Tata Consultancy Services, Axis Bank, Bajaj Finance, State Bank of India, Vodafone Idea, Eternal, and Wipro were the most actively traded underlying stocks Monday.  End

 

US$1 = INR 95.91

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Rajeev Pai

 

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